Ag. commodities

[Mick100]

With an increasing acerage of the world's arable land being used to grow bio fuel crops there's a bullish case for ag commodities.
There is going to be a huge increase in the acerage of corn planted this year in the US (for ethanol production) which means that less acerage of other crops, such as cotton, will be planted.

Sugar is another crop used to produce enthanol - far more efficently than corn. Brazil is the world's number one sugar producer - they have recently struck a deal to export enthanol to Japan.

Most of the world's cattle, pigs and poutry are grain fed.
I think ag commodities are about to join the commody bull market which has so far beeen led, since 2001, by the base metals.

I'm currently holding Australian agricultural company - AAC, namoi cotton - NAM, and PG Wrightson - PGW (NZX).
.

[MrDevine]

Agree, George Soros has talked about the coming boom in ag commodities, trouble is there isn't much exposure unless you want to buy 'futures'. I have looked at AAC. PGW I used to hold however they've sunk, new moves into Argentina might pay dividends?

Mr D

[Mick100]

PGW may be worth a second look at these levels - I doubt the shareprice will go much lower
With the exception of lamb, NZ farmers are recieving good prices for thier produce at the moment. If the NZD continues falling in value then these price increases will be magnified.

PS, I trade options on futures - currently have long open positions in corn, soybean oil, coffee, sugar, cotton and orange juice.
,

[duncan macgregor]

quote:Originally posted by Mick100

PGW may be worth a second look at these levels - I doubt the shareprice will go much lower
With the exception of lamb, NZ farmers are recieving good prices for thier produce at the moment. If the NZD continues falling in value then these price increases will be magnified.

PS, I trade options on futures - currently have long open positions in corn, soybean oil, coffee, sugar, cotton and orange juice.
,

MICK, you are completely wrong with PGW. The NZ farmers are doing a starve right now. They are spending the minimum over the counter at PGW. The reason for the starve is the high KIWI dollar. If the dollar goes down PGW sp will go up. The dollar is headed in the wrong direction, the sp will continue to go down. How far it goes down depends on the value of the dollar. I say down another 10c unless we see changes in farmers fortunes. Incidentely the sp was over $2-30 now struggling above $1-50 why are you holding?.macdunk

[skinny]

Yeah I've been thinking about this for a while and came to the conclusion as I own a NZ house I'm already long ag. commodities! The NZD cycle usually moves in step with the world price of its agriculturally based commodity basket - they're near 30 years highs at the moment and the NZD is also near highs against most other currencies. My favourite commodity play, as has been the case for the past three years, is lead

[Mick100]

Demand for Corn Driving Up Meat Prices
Friday March 9, 11:47 am ET
By Libby Quaid, AP Food and Farm Writer
Strong Demand for Corn From Ethanol Plants Is Driving Up the Cost of Livestock


WASHINGTON (AP) -- Strong demand for corn from ethanol plants is driving up the cost of livestock and will raise prices for beef, pork and chicken, the Agriculture Department said Friday.
Meat and poultry production will fall as producers face higher feed costs, the department said in its monthly crop report. Ethanol fuel, which is blended with gasoline, is consuming 20 percent of last year's corn crop and is expected to gobble up more than 25 percent of this year's crop.

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The price of corn, the main feed for livestock, has driven the cost of feeding chickens up 40 percent, according to the National Chicken Council. The council says that chicken, the most popular meat with consumers, will soon cost more at the grocery store. The industry worries the competition from ethanol could cause a shortage of corn.

The average price of corn, unchanged from last month, is $3.20 a bushel, up from $2 last year.

While chicken producer Tyson Foods Inc. posted its first profitable quarter in a year Jan. 29, executives warned that a dramatic rise in feed costs will raise chicken prices.

"Companies will be forced to pass along rising costs to their customers, meaning consumers will pay significantly more for food," Chief Executive Dick Bond said.

Deputy Agriculture Secretary Chuck Conner said USDA is keeping an eye on corn supply and demand. Demand likely will prompt farmers to plant more acres in corn, he said.

"We do have confidence in the marketplace's ability to react," Conner said. "We believe producers are seeing the market saying, `I need more corn, not only for ethanol, but for our feed needs in this country.'"

The department will issue planting predictions later this month.

For soybeans, analysts said prices are averaging $6.30 a bushel, up from last month's average of $6.20. Last year's price was $5.66. Wheat prices are averaging $4.25 a bushel, unchanged from last month and up from $3.42 last year.

Also in the crop report, the department updated the citrus forecast to include the effects of a January freeze on California oranges. The California crop will be 39 percent smaller than last year, and combined with freezes that are expected to reduce the Florida crop, the nation's crop is expected to be 18 percent smaller than last season.

Shares of Archer Daniels Midland Co., the country's biggest ethanol producer, fell 36 cents to $34.45 in morning trading on the New York Stock Exchange. Shares of Tyson fell 6 cents to $17.99.

[duncan macgregor]

We all know this MICK the price of grain etc etc. The flow on to the ASX and the NZX range of farming companies wont have an effect for this year on share prices. You are 12 months in front of the market. The AUSTRALIAN drought takes care of most of the advantage on that side of the tasman for the remainder of the year. On the NZ side, we have a govt that throws a bucket of cold water over farm expectations the moment the dollar dares to drop. This will all change, but not this year. Worth keeping an eye on, but not worth investing until it turns. The farm service companies are finding it tough right now, but not as bad as the farmers, until that changes its not worth even thinking about it. MACDUNK

[Mick100]

KEVIN KERR
Got juice?
Commentary: Orange juice, a risky but hot commodity
PrintE-mailDisable live quotesRSSDigg itDel.icio.usBy Kevin Kerr, MarketWatch
Last Update: 11:55 AM ET Mar 8, 2007


NEW YORK (MarketWatch) -- One market that you can always count on as a good source of weather-based action is orange juice. It often springs to mind when people think of the "wild and wooly" futures markets. It's right up there with pork bellies in the folklore department.
In reality, OJ futures can be an incredibly lucrative market to trade -- if an investor knows how to play it.
Not getting squeezed
The commodities markets are not for the faint of heart, but then again none of the markets are lately. For the investor who wants to get involved in the commodities markets, OJ can be a good place to start -- using extreme caution however.
One cardinal rule that I always teach my clients and readers is that these markets are not for capital that is simply earmarked "high risk and fully disposable." It must be truly disposable.
In other words, you could take this cash and put it in the garbage disposal or fireplace and not have to change your lifestyle. At the most, perhaps a little discomfort, like after eating a big meal -- but if you're reaching for the Bromo, this is probably not for you.
Does that mean that these aren't good investments? Absolutely not. It means that risk capital needs to be just that. Risk often involves losses even if you finish with profits at the end. Once you've established that you're truly using risk capital, then you are ready to proceed.
Why juice and why now?
Florida's orange crop and orange industry has been decimated over the last several years and the situation is getting worse. It may never get better. Hurricanes ravaged the citrus groves and wiped out whole areas of growers. Citrus diseases, spread by wind from hurricanes, have taken a toll too and still are. Citrus canker has eaten away many viable groves and damaged others.
Some growers have simply given up and sold their land to aggressive real estate developers. Those are trees that will never come back on line; a permanent loss.
Another major problem is that migrant workers, once abundant and a staple to the harvesting industry are now scarce. The Immigration and Naturalization Service and Homeland Security crackdowns have intimidated workers and led to many of them fleeing. The hurricanes have done the same thing. Growers are beside themselves when they have oranges on the trees, literally money growing on trees, and nobody to pick them. Usually the fruit falls to the ground and rots.
Last year, OJ prices surged as the crop has gotten smaller and smaller. The picture is no brighter for 2007. Citrus disease is till spreading and predictions for an active hurricane season due to La Nina have growers nervous and exhausted. Not to mention the fact that the freakishly warm weather in the early part of winter gave rise to new buds blooming on trees early in Florida. The recent late cold snap sent temps in Florida's growing region down into the 20's some nights. The delicate buds and the current oranges on the tress waiting to be picked have certainly had damage. The citrus grower organizations have been saying that there was no damage, but it seems highly unlikely.
Numbers game
The United States Department of Agriculture tracks all the crops in the U.S. and this Friday it will release its latest crop production report for OJ. Estimates are for the number to come in lower than the 140 million 90 lbs. boxes estimated by the USDA. Some expectations are for around 5 million to 7 million less. I think it's a lot lower, around 10 million to15 million -- maybe more.
If the report will actually reflect that, it's hard to tell. Government numbers often leave more questions than answers.
One thing is certain: Florida's crops have been severely impacted and the citrus industry is struggling. Much of the crop that was relied on in the past is simply gone and never to return. The hard freeze for citrus in California, while no dire

[Mick100]

Grains Still Rallying Despite Broad Commodities Volatility

By Jon A. Nones
10 Mar 2007 at 03:56 PM GMT-05:00


St. LOUIS (ResourceInvestor.com) -- In its monthly crop report, the U.S. Department of Agriculture (USDA) said on Friday that strong demand for corn from ethanol plants is driving up the cost of livestock and will raise prices for beef, pork and chicken. Corn prices have been rising rapidly since September 2006.

The USDA said U.S. beef output would dip by 65 million pounds and chicken by 125 million pounds, with total red meat and poultry production forecast at 90.68 billion pounds. Producers had sent fewer animals to slaughter, because feed prices had increased along with those of corn, soybean and wheat.




Today, April live cattle contracts are trading up .28 cent to $1.0130 a pound on CBOT, about 7 cents higher from the start of the year. April feeder cattle is up .43 cent at $1.0715, about 10 cents higher for the year. April lean hogs rose .10 cent to 67.85 cents a pound, up about 7 cents, while May pork bellies rose 1.35 cents to $1.0775 a pound, up 16 cents since January.

However, corn and soybeans are the success stories among commodities so far this year, up more than 15% and 10%, respectively since January.

Although May corn fell 4 cents to $4.17 1/4 a bushel today, prices moved as high as $4.50 a bushel in February, and have risen 80% from early September 2006.

Ethanol fuel is consuming 20% of last year's corn crop and is expected to gobble up more than 25% of this year's crop. This is up drastically from 5% in 2004 and 6% in 2005.

U.S. ending stocks to usage ratio for the 2006/2007 crop year is pegged at 10.2%, the 4th lowest on record.

U.S. ethanol production is up almost 30% over last year with new production facilities coming online regularly. There are over 100 ethanol plants in operation at present in the U.S., but 40 more are in the making. Right now, there are 900 gas stations selling 85% ethanol (E85).

Just today, U.S. President George W. Bush signed an agreement with Brazil on ethanol as a means of boosting alternative fuels production in the Americas.

Looking at soybeans, which are used in some biodiesel, price have risen 44% since early September 2006. The contracts are now priced at $7.59 1/6 a bushel, after breaching $8.00 a bushel in February.

According to the DOA Farm Service Agency, one bushel of soybeans yields approximately 1.4 gallons of biodiesel. Soybeans contain about 20% oil, so it takes almost 7.3 pounds of soybean oil to produce a gallon of biodiesel.

In 2005, 75 million gallons of biodiesel were produced using 547.5 million pounds of vegetable oil. Analysts estimated that production would double in 2006, with 150 million gallons produced utilizing 1.1 billion pounds of vegetable oil.

Presently we have 53 biodiesel plants operating, with 38 more under construction and 22 additional plants being planned. The U.S. Department of Energy goal is to replace 30% of transportation fuels with biofuels by 2030.

Wheat prices have been volatile this year, hitting lows of $4.60 and highs of $5.20 per bushel. Prices are only up about 5 cents since the start of the year and 1% in six months, now trading at $4.76 1/4 a bushel. (See RI’s latest coverage of the grains.)

Also in the crop report, the department updated the citrus forecast to include the effects of a January freeze on California oranges. The California crop will be 39% smaller than last year. This is far less than growers’ first estimates that 75% of California's crop could be lost.

The USDA said below freezing temperatures were recorded on two different occasions during the month but the duration was not long enough to cause any severe damage to groves.

FCOJ contracts on the New York Board of Trade first surged 3.5% on the news in January to nearly 210 cents. Since then, however, orange juice has fallen back, now trading at 204.50 cents per pound, losing 3.70 cents on Friday.

However, frozen concentrated orange juice (FCOJ) contracts have gained about 5% si

[Mick100]

Wheat Futures Rise as Growers May Destroy Crop in Favor of Corn

By Tony C. Dreibus

March 16 (Bloomberg) -- Wheat futures rose for the first time this week on speculation some U.S. farmers in the eastern Midwest will plow under their soft-red winter wheat to make room for more-profitable corn.

About 8.33 million acres were seeded with soft-red winter wheat in eastern Midwest states in October and November, according to government estimates. Corn may replace wheat on some of those acres where the wheat plants were weakened by excessive rains during planting season. Corn prices are up 76 percent in the past year while wheat prices rose 30 percent.

``I talked to a guy who said they're going to be turning cattle out on their wheat pasture then they're going to rip it up and plant to corn,'' said Jason Britt, an analyst at Central States Commodities Inc. in Kansas City, Missouri.

Wheat futures for May delivery rose 2.75 cents, or 0.6 percent, to $4.5825 a bushel in at 10:17 a.m. on the Chicago Board of Trade after falling yesterday to the lowest close since Feb. 7. Most-active futures, down 3.8 percent this week, have fallen 18 percent from a 10-year high on Oct. 17. Prices rose 48 percent last year after drought hurt global crops.

Parts of the eastern Midwest received as much as three times normal precipitation in October and November when growers were trying to seed their soft red winter-wheat crop. Because of the excess moisture the plants didn't get a good start, Britt said. As corn prices continue to rise it may be more profitable for farmers to plow their wheat under and plant corn.

``People transferring wheat to corn -- that's going to be done,'' said Walter Otstott, a senior broker at Dallas Commodity Co. in Dallas. ``We may very well see more of that happening'' as corn prices rise mostly because of demand for the fuel-additive ethanol, he said.

Wheat is the fourth biggest U.S. crop with a 2006 value of $7.7 billion. Corn is the biggest, valued at a record $33.8 billion, with soybeans in second place, followed by hay.

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

To contact the reporters on this story: Tony C. Dreibus in Chicago at tdreibus@bloomberg.net .

Last Updated: March 16, 2007 11:25 EDT